Private residence to rental & the Mortgage

3 Replies

I'm having trouble understanding how the follow works, or is done. 

You buy a property with a personal mortgage, and you are there for a couple years. And then you want to keep the property as a rental, and move into another place. Can you keep the same mortgage on the first place, or do you need to refi with a new mortgage because you don't live there anymore and it's an income property? 

@Account Closed - It depends what type of mortgage you used to purchase the first property, and what type of mortgage you're looking to use for the new property.

There's 4 main types of mortgages in residential

FHA Loan - 3.5% down. Has eligibility restrictions that rules out investors who own too many houses. This is primarily for home owners. If you bought a house with this loan, you're required to live in it for 1 year. Then you can refinance it into a Conventional loan, and buy a new house with the FHA loan IF the new house purchase is a significant upgrade and/or is required for work/family.

VA Loan - 0% Down. Similar to the FHA loan, but only available to military. Every military member gets a cap of $480kish, with which they can buy a house using this loan. If they decide to move, then they either have to sell their current house, refinance it into a Conventional loan, or buy a new house that keeps them within that $480k cap. However, the new house would need to be in there new transfer location.

USDA Loan - 0% Down. This loan is similar to the above as well, except it's available to anyone living in a Rural area. You can buy a 1-4 unit property with it, but you can only have 1x at the same time. It's super similar to FHA.

Conventional loan - 3%-20% Down.   This is  the most versatile loan.  You're allowed to have 10 of these at a time.  This is the loan product you'll default to anytime you refinance to when you're getting out of the low money down loans above. 

I hope this was helpful

Ok, thanks. I understand that the conventional loan is the most versatile. I guess I was confusing the advantage of the FHA loan and living there, with the conventional loan. I thought there might be some requirements to live there

The conventional is the way to go for me, at least at this time. Thanks!